Jane Austen Explains Monetary Policy

Who knew? Jane Austen was a dyed-in-the-wool, easy-money-loving, stimulus-demanding 'expert' on monetary policy. As Citi's Steven Englander finds in his eloquent new year's note, it seems the antiquated authoress has much sense-and-sensibility to reproach those of us who believe in real money and a return to a real economy. From justifying QE, "Money is the best recipe for happiness," to the importance of the wealth effect, "If this man had not twelve thousand a year, he would be a very stupid fellow;" Austen offers some 'balance' to offer on Fed transparency, tapering, and congressional spending.

Via Citi's Steve Englander,

‘Elinor now found the difference between the expectation of an unpleasant event, however certain the mind may be told to consider it, and certainty itself.” – particularly apt in light of the market reaction to tapering.

"Finish it at once. Let there be an end of this suspense. Fix, commit, condemn yourself." -- more on tapering

"A watch is always too fast or too slow. I cannot be dictated to by a watch." -- on the tapering calendar

“I have not wanted syllables where actions have spoken so plainly.” -- advice on communications policy

"I think we are a great deal better employed, sitting comfortably here among ourselves, and doing nothing." -- insight into labor force participation

"I do not think it worth while to wait for enjoyment until there is some real opportunity for it." -- the hysteresis effect

"A large income is the best recipe for happiness I ever heard of." – on the need for more stimulus

"I am sorry to tell you that I am getting very extravagant and spending all my money: and what is worse for you, I have been spending yours too. " -- message to Congress

"If this man had not twelve thousand a year, he would be a very stupid fellow." – the importance of the wealth effect for human capital

"Money is the best recipe for happiness.” – QE justified

"If things are going untowardly one month, they are sure to mend the next." -- on economic forecasting